Finance Minister Nirmala Sitharaman, while presenting the Union Budget for 2025-26 in Parliament today, announced transformational reforms in six key sectors to enhance India’s growth potential and global competitiveness over the next five years. The financial sector, which includes insurance, pensions, bilateral investment treaties (BITs), and other areas, has been identified as a priority for reform.
FDI in Insurance Sector
The government has decided to increase the Foreign Direct Investment (FDI) limit in the insurance sector from 74% to 100%. Finance Minister Sitharaman stated that this increase would be available to companies investing the entire premium within India. Existing guardrails and conditions related to foreign investment will be reviewed and simplified to attract more foreign capital into the sector.
Pension Sector Reforms
To enhance coordination and development in the regulation of pension products, the government will establish a dedicated regulatory platform. This move is expected to streamline oversight and improve the efficiency of the pension sector.
Simplification of KYC Process
The Centralized KYC (Know Your Customer) Registration process will be revamped and implemented in 2025 to simplify compliance requirements. A structured system will be introduced to ensure seamless periodic updates.
Merger and Acquisition Reforms
The Finance Minister also announced measures to rationalize and simplify the approval processes for company mergers. The scope of fast-track mergers will be expanded, ensuring a more efficient and streamlined approach to corporate restructuring.
Bilateral Investment Treaties (BITs)
In an effort to promote sustainable foreign investments under the “India First Development” approach, the government will revamp the existing bilateral investment treaties to make them more investor-friendly.
These reforms are expected to drive economic growth, enhance foreign investment, and streamline regulatory processes, further strengthening India’s position in the global financial landscape.
